Investment Opportunities in India

February 21, 2011

Investments and business in India

Filed under: Business Opportunities — Harjeet @ 4:06 PM

The steady good performance of Indian economy is attracting overseas investors to do business in India. Even the existing international companies are increasing their size of business in India.

Most of the Investment Strategies keep in mind while doing the investment, around factors like liberalised economy centre is a risk-return trade off for a potential investor. The Department of Industrial Policy and Promotion has opened more fields for FDI like .

Indian government’s friendly FDI policy, stability of policy and no reversibility approach is helping in attracting more foreign direct investment in India. The Department of Industrial Policy and Promotion (DIPP) is planning to open more fields for FDI like the multi-brand retail and defence sectors for FDI. The DIPP is also involved in preparing a national manufacturing policy to increase the share of these activities in the GDP to 24 per cent from 16 per cent at present.

Foreign direct investment in India was allowed in certain sectors through the automatic route by the Government, even though there could be a cap for the maximum amount of investment. For instance investments in the airports sector is allowed up to 100 per cent, but any percentage above 74 per cent would require government approval. Similarly for the telecom, FDI allowed is 74 per cent, but for any FDI above 49 per cent government approval is needed. In recent times the government gave permission for some more sectors for FDI .FDI up to 51 per cent was allowed for retail trade, subject to prior permission.

The other sectors which came under the purview of similar investments are manufactures of industrial explosives, dangerous chemicals, establishing Greenfield airports and cash and carry wholesale trading and export trading. Investment in certain specified areas like Export Processing Zones, Electronic Hardware technology Park and Software Technology Park are also included in the gamut of automatic route. It is interesting to note that the investments in India are being targeted from all parts of the globe. The level of impact for the global recession was such that there was a surge of investments were directed towards the developing countries. Assessing them as the hub of consumption, numerous deals were struck, policies modified and so on, the investments was a part of the companies to recover from the recession. One sector, which was heavily targeted by the investors, which saw a surge, was real estate – basically formulated on basis of the large influx of investments coming into India.

Real estate in India has seen an unprecedented growth in the last few years. Increasing demand for commercial and residential properties and liberalisation government policies has lessened the need for permissions and licenses for starting their real estate projects. According to a latest report of an industry body and Ernst and Young, India is ranked as the 5th most attractive destination from the point of future real estate investments. Although China has topped the list but global investors have more faith in Indian market because of its more democratic nature.

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